Explain the different Accounting Standards for Local Bodies.
Answers
Accounting Standards formulated by the ICAI do not override the statute/ law that govern the preparation and presentation of general purpose financial statements of a particular Local Body. Accounting Standards already issued by ICAI apply to those enterprises as stated in paragraph 3.3 of the ‘Preface to the Statements of Accounting Standards’. These Accounting Standards are not designed to apply to Local Bodies. However, since these Accounting Standards lay down wholesome principles of accounting, Local Bodies may follow these Standards during the transitional period, until the Accounting Standards for Local Bodies (ASLBs) are issued by the ICAI. Thus, once an ASLB is issued, the Local Bodies should follow the ASLB and not the corresponding Accounting Standard issued by the ICAI.